FINANCIAL RATIO'S IMPACT ON FINANCIAL DISTRESS: PRE- AND DURING THE COVID-19 PANDEMIC

Stefanus Dimas Saputro, Jennyfer Natania

Abstract


The purpose of this research is to examine the effects of several financial ratios on financial distress prior to and during the COVID-19 pandemic. The research sample consists of 51 basic industrial and chemical businesses that are listed on the Indonesia Stock Exchange between 2018 and 2021. The Springate model is employed to assess the level of financial distress, and logistic regression is used as the analytical method. Liquidity, activity, leverage, profitability ratios and control variables had a significant impact on financial distress both before and during the COVID-19 pandemic. This suggests that these financial ratios, along with other controlled factors, collectively influenced financial distress. The study aims to offer significant perspectives to the audience and function as a guide for prospective investigators and enterprises, namely those operating in the chemical and basic industrial sectors listed on the Indonesia Stock Exchange. It highlights the importance of financial ratios in improving a company's performance and financial condition, which can help minimize financial distress.


Keywords


Financial Ratios; Financial Distress; COVID-19 Pandemic; Industry and Chemical Companies

Full Text:

PDF

References


Alifiah, M. N., & Tahir, M. S. (2018). Predicting Financial Distress Companies In The Manufacturing And Non-manufacturing Sectors In Malaysia Using Macroeconomic Variables.Management Science Letters, 593–604. https://doi.org/10.5267/j.msl.2018.4.031.

Altman, E. I., Hotchkiss, E., & Wang, W. (2019). Corporate Financial Distress, Restructuring, and Bankruptcy: Analyzing Leveraged Finance, Distressed Debt, and Bankruptcy (4th ed.). Wiley.

Amanda, Y., & Tasman, A. (2019). The Influence of Liquidity, Leverage, Sales Growth and Company Size on Financial Distress in Manufacturing Companies Listed on the Indonesian Stock Exchange (BEI) for the 2015-2017 Period. Ecogen Journal, 2(3), 453. https://doi.org/10.24036/jmpe.v2i3.7417.

Amoa-Gyarteng, K. (2021). Corporate Financial Distress: The Impact Of Profitability, Liquidity, Asset Productivity, Activity And Solvency. Journal of Accounting, Business and Management (JABM), 28(2), 104. https://doi.org/10.31966/jabminternational.v28i2.447.

Andayani, T. A., & Puspitasari, E. (2021). The Influence of Ownership Structure, Financial Performance, and Company Size on Indications of Financial Difficulty. JOURNAL OF ACCOUNTING PEARLS, 6(2), 118–133. https://doi.org/10.51544/jma.v6i2.2049.

Armadani, A., Fisabil, A. I., & Salsabila, D. T. (2021). Analysis of Company Bankruptcy

Assaji, J. P., & Machmuddah, Z. (2019). Financial Ratios and Prediction of Financial Distress. Journal of Economic and Business Research, 2(2). https://doi.org/10.33633/jpeb.v2i2.2042.

Ayu, A., Handayani, S., & Topowijono, T. (2017). The Influence of Liquidity, Leverage, Profitability and Company Size on Financial Distress (Study of Manufacturing Companies in the Basic Industry and Chemical Sectors Which.

BPS. (2021, February 5). Indonesia's economy in 2020 fell by 2.07 percent. Retrieved from https://www.bps.go.id

Carolina, V., Marpaung, E. I., & Pratama, D. (2018). Financial Ratio Analysis to Predict Financial Distress Conditions (Empirical Study of Manufacturing Companies Listed on the Indonesian Stock Exchange for the 2014–2015 Period). Maranatha Accounting Journal, 9(2). https://doi.org/10.28932/jam.v9i2.481

Chrissentia, T., & Syarief, J. (2018). Analysis of the Influence of Profitability Ratios, Leverage, Liquidity, Firm Age and Institutional Ownership on Financial Distress (In Non-Financial Services Companies Listed on the Indonesian Stock Exchange in 2014-2016). SiMAk, 16(1), 45–61.

Christine, D., Wijaya, J., Chandra, K., Pratiwi, M., Lubis, M. S., & Nasution, I. A. (2019). The Influence of Profitability, Leverage, Total Cash Flow and Company Size on Financial Distress in Property and Real Estate Companies on the Indonesian Stock Exchange in 2014-2017. Jesya (Journal of Sharia Economics & Economics), 2(2), 340–350. https://doi.org/10.36778/jesya.v2i2.102

Creswell, J. W. (2008). Research Design: Qualitative, Quantitative, and Mixed Methods Approaches, 3rd Edition (3rd ed.). SAGE Publications, Inc.

Edi, E., & Tania, M. (2018). The Accuracy of the Altman, Springate, Zmijewski and Grover Models in Predicting Financial Distress. Journal of Accounting and Finance Review, 8(1), 79. https://doi.org/10.22219/jrak.v8i1.28.

Hidayat, T., Permatasari, M., & Suhamdeni, T. (2021). Analysis of the Influence of Financial Ratios on the Financial Distress Conditions of Manufacturing Companies Listed on the Indonesian Stock Exchange. Pelita Bangsa Business Accounting Journal, 5(02), 93–108. https://doi.org/10.37366/akubis.v5i02.156.

Kamaluddin, A., Ishak, N., & Mohammed, N. F. (2019). Financial Distress Prediction Through Cash Flow Ratios Analysis. International Journal of Financial Research, 10(3), 63. https://doi.org/10.5430/ijfr.v10n3p63

Kurniasanti, A., & Musdholifah. (2018). The Influence of Corporate Governance, Financial Ratios, Company Size and Macroeconomics on Financial Distress (Study of Mining Sector Companies Listed on the Indonesian Stock Exchange 2012–2016). Journal of Management Science, 6(3), 197–212.

Kurniawan, M. A., Hariadi, K. E., Sulistyaningrum, W. O., & Kristanto, A. B. (2021). COVID-19 Pandemic And Bankruptcy Predictions: Do Financial Conditions Before 2020 Play a Role? Journal of Accounting, 12–22. https://doi.org/10.28932/jam.v13i1.3193.

Lucky, L. A., & Michael, A. O. (2019). Leverage And Corporate Financial Distress In Nigeria: A Panel Data Analysis. Asian Finance &Amp; Banking Review, 3(2), 26–38. https://doi.org/10.46281/asfbr.v3i2.370.

Masita, A., & Purwohandoko, P. (2020). Analysis of the Influence of Financial Ratios, Managerial Ownership and Institutional Ownership on Financial Distress in Trade, Services and Investment Sector Companies Listed on the IDX in 2015–2018. Journal of Management Science, 8(3), 894. https://doi.org/10.26740/jim.v8n3.p894-908.

Maulida, I. S., Moehaditoyo, S. H., & Nugroho, M. (2018). Financial Ratio Analysis to Predict Financial Distress in Manufacturing Companies Listed on the Indonesian Stock Exchange 2014–2016. Scientific Journal of Business Administration and Innovation, 2(1), 180–194. https://doi.org/10.25139/jai.v2i1.1149.

Meiliawati, A., & Isharijadi, I. (2017). Comparative Analysis of the Springate and Altman Z Score Models on Potential Financial Distress (Case Study of Cosmetics Sector Companies Listed on the Stock Exchange

Muzharoatiningsih, & Hartono, U. (2022). The Influence of Financial Ratios, Sales Growth, and Company Size on Financial Distress. Journal of Management Science, 10(3), 747–758. https://doi.org/10.26740/jim.v10n3.p747-758.

Nurhayati, D., Dewi, R. R., & Fajri, R. N. (2021). The Influence of Financial Ratios on Financial Distress in the Food and Beverage Industry on the Indonesian Stock Exchange for the 2017–2019 Period. Economics: Journal of Economics and Business, 5(1).

Oktarina, D. (2018). Financial Distress Prediction Using Financial Ratios, Macroeconomic Sensitivity and Intellectual Capital. ULTIMA Accounting, 10(1), 16–33. https://doi.org/10.31937/akuntansi.v10i1.841

Prabowo, A., & Iswanaji, C. (2022). Analysis of Factors That Influence Financial Distress in Industrial Sector Companies During the Covid-19 Pandemic. Maneksi Journal, 11(1), 273–280.

Santoso, S. I., Fala, D. Y. A. S., & Khoirin, A. N. N. (2017). The Influence of Profits, Cash Flow and Corporate Governance on Financial Distress (Study of Manufacturing Companies Listed on the Indonesian Stock Exchange for the 2011-2015 Period). Al-Buhuts Journal, 13(1), 1–22.

Setyowati, W., & Sari, N. R. N. (2019). The Influence of Liquidity, Operating Capacity, Company Size and Sales Growth on Financials

Silalahi, D. E., & Ginting, R. R. (2020). Indonesian Government Fiscal Policy Strategy to Regulate State Revenue and Expenditures in Facing the Covid-19 Pandemic. Jesya (Journal of Sharia Economics &Amp; Economics), 3(2), 156–167. https://doi.org/10.36778/jesya.v3i2.193

Subagyo, Pakpahan, Y., Budiman, F., & Prasetya, W. (2019). The Influence of Liquidity, Leverage and Sales Growth on Financial Distress of Manufacturing Companies on the IDX Before and During Covid. Journal of Education and Counseling, 4(4), 3663–3674.

Sudaryo, Y., Purnamasari, D., Sofiati, N. A., & Hadiana, A. (2020). The Influence of Liquidity, Profitability, Leverage, Company Size and Interest Rates on Financial Distress Conditions in 12 Manufacturing Companies Listed on the Indonesian Stock Exchange (Period 2012-2018). Ekonam: Journal of Economics, Accounting & Management, 1(2), 87–100. https://doi.org/10.37577/ekonam.v1i2.214

Ratios During the Covid-19 Pandemic. Journal of Accounting, 99–108. https://doi.org/10.28932/jam.v13i1.3197. Listed on the Indonesian Stock Exchange 2012-2015). Brawijaya University Undergraduate Business Administration Journal, 43(1), 138–147.

Wardani, N. A., & Trisnawati, R. (2021). The Influence of Good Corporate Governance, Company Size, Leverage and Operating Income on Financial Distress (Empirical Study of Companies in Various Industrial Sectors Listed on the Indonesian Stock Exchange in 2017-2019). Proceedings of the URECOL, 280–292.

World Health Organization. (n.d.). Coronavirus Disease (COVID-19) Pandemic. Retrieved from https://www.who.int.

Wulandari, E. W., & Jaeni, J. (2021). Factors That Influence Financial Distress. Batanghari University Jambi Scientific Journal, 21(2), 734. https://doi.org/10.33087/jiubj.v21i2.1495.


Refbacks

  • There are currently no refbacks.


Copyright (c) 2023 Stefanus Dimas Saputro, Jennyfer Natania

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

favicon Accounting Study Program  | Faculty of Economics and Business  | Universitas Pelita Harapan | Lippo Karawaci, Tangerang, Indonesia, 15811 | Tel +62 21 5460901 | Fax +62 21 5460910

Flag Counter